Mineral Resources shares dip after $1.3b haul road sale
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More news: Shares in Mineral Resources lowered on the ASX after the mining major sold a 49% interest in its Onslow Iron project's haul road to Morgan Stanley Infrastructure Partners for $1.3 billion.
Shares were down 1.2% to $68.70 by 1:30pm AEST.
Citi analysts said that the haul road sale was a "vote of confidence" in the project and provided Mineral Resources with a "little black book" of possible partners to help fund its gas ambitions.
Morningstar analysts retained their fair value share price of $67 for Mineral Resources noting the sale was "broadly as we expected". They noted that cash proceeds from the sale would strengthen the miner's balance sheet and release capital to be redeployed to new projects and shareholder returns.
MinRes sells 49% haul road stake to Morgan Stanley for $1.3b
The news: Mineral Resources (MinRes) has sold a 49% interest in its Onslow Iron project's haul road to Morgan Stanley Infrastructure Partners for $1.3 billion.
The numbers: The 150 kilometre Onslow Haul Road is a key component of MinRes' transportation infrastructure, which has helped to unlock stranded iron ore deposits in the West Pilbara region of Western Australia.
The transaction values the road at $2.7 billion, while MinRes expects total after tax net cash proceeds of $1.2 billion. The deal is priced on 9.4 times pro-forma EBITDA based on the road’s capacity.
The context: MinRes will retain majority ownership of the road, including rights to use it for mine-to-ship delivery of iron ore from the project.
The miner said that the deal is expected to complete in the second half the calendar year, subject to finalisation of project conditions and Foreign Investment Review approval.
What they said: MinRes managing director Chris Ellison said: "As the first transaction of its kind in the Australian iron ore industry, it showcases the considerable value of MinRes' portfolio of infrastructure assets and our ability to unlock significant capital".
"The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders," he said.
The source: ASX announcement
